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Originally Posted by N8SBlaze
It for sure looks like the drivers side seal on the front differential is leaking. The passenger side is more difficult to tell since it looks like the drive shaft rides inside an outer tube that connects to the passenger side front differential. Closer to the CV joint on the passenger side it is wet from what appears to be gear lube by the feel and smell of it.
On the aft side of the front differential there does not appear to be any leaking where the shaft comes in from the transfer case.
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You should be able to remove the axel shaft and pull out the stub in rear end and put in a new seal.
You can do it DIY a lot cheaper than 500 the shop wanted.
A seal and a 1-2 hrs labor should get it.
Good Luck
MT